MC EXCLUSIVE PVR INOX says 4700BC sale will not dent F&B revenues, sees big upside from Marico deal

popcorn

PVR INOX’s decision to exit gourmet popcorn brand 4700BC will not dent its food and beverage business, and will, in fact, improve its earnings profile, the multiplex chain said on Monday.

The company announced on January 26 that it has divested its stake in Zea Maize, the owner of 4700BC, selling the brand to FMCG major Marico for Rs 226.8 crore. PVR INOX had acquired a 70 percent stake in the company in 2015 for around Rs 5 crore.

Popcorn and profit

“The sale of 4700BC will have no impact on our food and beverage revenue. When we sell this business, it removes a loss-making subsidiary and is therefore accretive to our earnings,” said Gaurav Sharma, Chief Financial Officer (CFO) of PVR INOX told Moneycontrol. “It also presented a timely monetisation opportunity for a non-core asset to unlock shareholder value.”

Sharma said the popcorn brand contributed about Rs 100 crore in annual revenue, accounting for less than one percent of PVR INOX’s total F&B sales. In contrast, 4700BC reported an EBITDA loss of nearly Rs 14 crore in FY25 and a total loss of about Rs 16 crore.

Also read: Inside PVR Inox’s popcorn strategy: Driving F&B spends amid weak box office in FY25

“The big benefit is that this business was loss-making. By exiting, we remove that drag on earnings,” he said, adding that the divestment will have “zero impact” on PVR INOX’s in-cinema and home delivery operations.

Moviegoers will continue to see 4700BC popcorn at PVR INOX theatres, as the brand will remain available as a third-party offering.

In terms of returns, Sharma said the company had invested a total of Rs 94.6 crore as equity in 4700BC over time, with the bulk of the capital infused post-Covid as the brand expanded onto quick-commerce platforms.

“This transaction delivers a very healthy return. We will receive Rs 226.8 crore in cash, translating into an internal rate of return of around 24.5 percent on our total equity investment,” he said.

The immediate cash infusion of Rs 227 crore used to deleverage reduces net debt by around 25 percent, accelerating the goal of near-zero debt by FY27, noted Karan Taurani, Executive Vice President at Elara Capital.

The company will be able to save Rs 18-20 crore in annual interest cost, as it currently has a net debt of Rs 600 crore.

Also read: PVR INOX exits gourmet popcorn brand 4700BC for Rs 226.8 crore, stake sold to Marico

Use of funds

The proceeds will be deployed across three priority areas: reducing debt, strengthening the balance sheet, and funding the core cinema business.

“We have been pivoting towards a more asset-light model with more franchise-led expansion. But there are still large opportunities in markets where multiplex penetration is low,” Sharma said. “So, the use of proceeds will be a combination of deleveraging and funding growth.”

On the F&B front, PVR INOX plans to continue building its in-house brands. The company currently has around 10 food and beverage brands, including Dogfather, its hotdog concept.

“Our focus is on building brands in fast-growing categories where there are no strong players today,” Sharma said. “4700BC is more of an FMCG and QSR-style business.”

He added that 4700BC has built a strong multi-channel presence across digital commerce, modern retail and institutional channels, but its next phase of growth requires deeper FMCG capabilities.

“We realised that at this stage, the brand is better supported by a larger FMCG platform like Marico, which brings wider distribution, faster product expansion and more capital,” Sharma said.